The best bank accounts if you have $50k in savings

Putting away money for a home deposit or renovations? Some banks are giving savers rates of up to 6% p.a. on higher balances.

$22,020. No, it's not the cost of a corporate box at this weekend's AFL grand final. Nor is it the price tag on a new Kia Picanto - though it's not far off.

It happens to be the average amount of savings that Westpac discovered its customers had across various savings and bank accounts when it crunched the numbers a couple of years ago.

If that seems like quite a lot, it is, because Westpac noted that this figure is distorted by a relatively small number of deposit holders with larger savings balances.

It's not only particularly wealthy customers skewing the average though. As Rachel Wastell, personal finance expert at financial comparison website Mozo explains, it's not uncommon for people to need to stash tens or hundreds of thousands of dollars in a savings account - even on a short-term basis.

"There are plenty of reasons someone might need to save up or come into a good chunk of money-maybe it's for an emergency, an overseas holiday, buying a house, renovating, buying a car or paying for private schooling."

Take purchasing a home for one. The latest mean dwelling price in Australia is $949,400, which means that someone looking to buy a home at that price would need $189,880 saved up for a 20% deposit.

Now, that deposit could be accrued in a number of ways, from investing in shares to selling another property. But many buyers will choose to keep their deposit somewhere relatively accessible, such as a savings account, when they're ready to buy so they can move quickly should they want to make an offer.

As Wastell notes, there are a few reasons why a savings account may prove a better option for some people than other deposit accounts in these situations.

"Unlike term deposits, savings accounts provide easy access to funds without long-term commitments, allowing for greater flexibility while still earning interest."

What are the best savings accounts for higher balances?

While any saver looking for the highest return on their money will want to find an account with a competitive interest rate, irrespective of their balance, Wastell says that it may be particularly beneficial to those with bigger balances.

"Consider a saver with $5000 in savings getting a rate of 4.00% p.a. who makes no additional deposits, they would earn about $204 in interest over a year. Contrast that with someone holding $50,000 at the same rate, whose interest earnings would be $2037 for the year.

"Now, looking at a 4.50% p.a. rate on a $5000 balance, the saver would earn $230 - $27 more in interest over the year. Meanwhile, the saver with $50,000 would earn $2297 which is an extra $260 in interest over a year from just a 0.50% difference in rates."

So which banks are currently offering some of the most generous rates to savers with larger balances?

Last week member-owned bank The Mutual Bank launched a new special rate of 6.00% p.a. for savers on balances between $50,000 to $100,000 which, according to Mozo, is the highest savings rate they've recorded in their database since August 2013.

It's worth pointing out that this is a temporary rate only available until January 31 next year though, after which time it will revert to a rate of 4.50%.

The Mutual Bank's account is by no means the only offer available to those looking to earn a higher rate on a sizeable savings balance though.

How safe is money held in a savings account?

It's fair to say that it's exceedingly rare for banks to go bust in Australia - at least, in modern times. But for someone with $50,000, $100,000 or even $500,000 in a savings account, just how protected is it against an unlikely bank collapse?

In 2008, the federal government established the Financial Claims Scheme (FCS) - a scheme which is designed to safeguard money that Australians keep in deposit accounts like savings accounts, bank accounts, term deposits and offset accounts in the event that an institution goes under.

The FCS guarantees deposits of up to $250,000 per account holder, per institution. These must be what are known as authorised deposit-taking institutions (ADIs) like banks and credit unions though.

"This safety net can give you peace of mind, but if your balance exceeds this threshold, you might want to spread your savings across multiple banks to stay protected. Just make sure that each bank is under a different ADI licence," Wastell explains.

Beyond the safety of the money, Wastell also notes that people wanting to deposit a large amount of money in a savings account may also need think about the tax implications involved, as well as any proof of funding they might need to provide to their bank.

"Some banks may require proof of funds if you're depositing a large amount, especially for compliance and anti-money laundering regulations set by AUSTRAC. Keeping your documentation organised can help ensure a smooth process," she says.

"Tax is another factor to keep in mind. Interest earned on your savings is generally considered taxable income, so it's a good idea to keep track of your earnings and report them accurately come tax time."

Get stories like this in our newsletters.